ECB Letters Show Bullying Worked To Motivate Tough Actions

Previously confidential letters between Brian Lenihan, Ireland’s Minister of Finance, and Jean Claude Trichet, president of the European Central Bank, paint a picture of the ECB directing a sovereign nation in how they needed to manage their economy during a time of crisis. If Ireland did not succumb to the ECB’s request the central bank might have withheld critical funding. As a result Ireland instituted painful austerity measures, cut spending and increased taxes to meet ECB dictates. The letters also note with concern how various press reports quoting Eurozone political leaders exacerbated Ireland’s problems, citing increasing relative value spreads between…